Friday, January 16, 2009

Victorian workers are losing full-time jobs at a rate approaching 150 per day as employers slash costs and switch to cheaper part-time workers in a move set to deepen Australia's economic downturn.

Victoria's unemployment rate surged from 4.4 per cent to 4.6 per cent in December and the national rate from 4.4 to 4.5 as employers parted with 43,900 full-time staff - more than at any time since March 2003, and before that the 1991 recession.

The news came as the Australian share market suffered its biggest one-day fall this year, wiping 4.27 per cent off the ASX 200 and $38 billion from the value of Australian shares. United States retail figures released earlier showed spending sliding 2.7 percent in December, normally the time of strong holiday sales.

"Until now Australia has benefited from Chinese factories making too much and American consumers buying too much. The retail numbers tell us that half that equation has broken down, and the anecdotes out of China suggest the other half is breaking down," said Access Economics director Chris Richardson.

"Both of the props that supported Australia are being broken"...Acting Prime Minister Julia Gillard told a Melbourne press conference that she felt for Australians who were losing their jobs at what was a distressing and difficult time.

"We always said that Australia could not be immune from he global financial crisis and we are going to feel a further impact in the year ahead."

"We have boosted the economy by $36 billion to date and we stand ready to act further," she said.

Victoria has lost 13,100 full-time jobs since September, around 145 per day.

Ms Gillard said that manufacturing states such as Victoria could expect to be hit by longterm decline of manufacturing as well as the worldwide economic downturn.

"We have acted to protect jobs by measures such as our $6 billion car industry plan and there have been heartening announcements including in Geelong as a result," she said.

Opposition Finance Spokesman Joe Hockey said the government had little to show for its $10.4 billion economic stimuls package.

"It is clear that Kevin Rudd's pre-Christmas tax-funded binge has not delivered the full-time jobs or the full-time job security that he promised," he said.

"It is no good encouraging people to go and spend money at the shops if at the end of the day they don't have a job to pay their credit card bill."

Reserve Bank figures show credit card use slumped 9 per cent in November. Cash advances slipped 8 per cent to their lowest level since 1999.

"Our problem used to be that we spent too much," said Access director Mr Richardson. "But things get even worse if we all stop spending at the same time. Ultimately we all need to spend less. But if we all do it on the same day, we are comprehensively buggered."

"That's why the credit card news is so worrying - shoppers are on strike. The Reserve Bank and the government between them have just granted shoppers more spending power than they have ever had before, but by and large they are not choosing to fully use it."

The number of Australians unemployed climbed above half a million in December for the first time since 2006. Economists taking part in this month Age half-yearly survey predicted an unemployment queue of 750,000 by the end of the year.

The Australian Council of Social Service called on the government to introduce a paid work experience scheme for the long term unemployed and to boost the unemployment benefit by $30 a week to move it closer to the age pension.

JP Morgan economist Stephen Walters said he expected Australia's unemployment rate to double to 9 per cent by the end of 2010.

"This would actually be a more more benign outcome that during our last two recessions when the rate moved into double digits," he said.